Required information [The following information applies to the questions displayed below.] Raner, Harris & Chan is a consulting firm that specializes in information systems for medical and dental clinics. The firm has two offices-one in Chicago and one in Minneapolis. The firm classifies the direct costs of consulting jobs as variable costs. A contribution format segmented income statement for the company's most recent year is given: Office Total Company $ 525,000 283, 500 241,500 117,600 Chicago $ 105,000 31,500 73,500 Minneapolis $ 420,000 252,000 168,000 Sales 100.0% 100% 100% Variable expenses Contribution margin Traceable fixed expenses 54.0% 46.0% 30% 60% 70% 40% 22.4% 54,600 52% 63,000 15% Office segment margin 123,900 23.6% 18,900 18% $ 105,000 25% Common fixed expenses not traceable to offices 84,000 16.0% Net operating income 2$ 39,900 7.6% 2. By how much would the company's net operating income increase if Minneapolis increased its sales by $52,500 per year? Assume no change in cost behavior patterns. Net operating income increase
Required information [The following information applies to the questions displayed below.] Raner, Harris & Chan is a consulting firm that specializes in information systems for medical and dental clinics. The firm has two offices-one in Chicago and one in Minneapolis. The firm classifies the direct costs of consulting jobs as variable costs. A contribution format segmented income statement for the company's most recent year is given: Office Total Company $ 525,000 283, 500 241,500 117,600 Chicago $ 105,000 31,500 73,500 Minneapolis $ 420,000 252,000 168,000 Sales 100.0% 100% 100% Variable expenses Contribution margin Traceable fixed expenses 54.0% 46.0% 30% 60% 70% 40% 22.4% 54,600 52% 63,000 15% Office segment margin 123,900 23.6% 18,900 18% $ 105,000 25% Common fixed expenses not traceable to offices 84,000 16.0% Net operating income 2$ 39,900 7.6% 2. By how much would the company's net operating income increase if Minneapolis increased its sales by $52,500 per year? Assume no change in cost behavior patterns. Net operating income increase
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter7: Allocating Costs Of Support Departments And Joint Products
Section: Chapter Questions
Problem 30E: A company uses charging rates to allocate service department costs to the using departments. The...
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